B-157209, AUG. 6, 1965

B-157209: Aug 6, 1965

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ARCHITECT OF THE CAPITAL: REFERENCE IS MADE TO YOUR LETTER DATED JULY 9. REQUESTING OUR ADVICE IN REGARD TO CERTAIN QUESTIONS WHICH HAVE ARISEN IN CONNECTION WITH A DETERMINATION OF THE AMOUNTS PRESENTLY DUE MR. THE CONTRACT WAS ENTERED INTO FOR THE FURNISHING OF THE NECESSARY ARCHITECTURAL AND ENGINEERING SERVICES FOR A PROPOSED REMODELING OF THE SUITES. THE PROPOSED REMODELING WORK AND OTHER CHANGES WERE AUTHORIZED BY THE ADDITIONAL HOUSE OFFICE BUILDING ACT OF 1955. THE ARCHITECTS WERE REQUIRED TO PREPARE PRELIMINARY PLANS AND ESTIMATES OF COST AND. LARGE-SCALE AND FULL SIZE DETAIL DRAWINGS WERE TO BE FURNISHED AFTER THE LETTING OF A CONTRACT OR CONTRACTS FOR CONSTRUCTION AND THE ARCHITECTS WERE REQUIRED TO FURNISH THE SERVICES OF A RESIDENT REPRESENTATIVE FOR SUPERVISION OF THE CONSTRUCTION WORK.

B-157209, AUG. 6, 1965

TO THE HONORABLE J. GEORGE STEWART, ARCHITECT OF THE CAPITAL:

REFERENCE IS MADE TO YOUR LETTER DATED JULY 9, 1965, REQUESTING OUR ADVICE IN REGARD TO CERTAIN QUESTIONS WHICH HAVE ARISEN IN CONNECTION WITH A DETERMINATION OF THE AMOUNTS PRESENTLY DUE MR. ROSCOE DEWITT AND MR. FRED L. HARDISON OF DALLAS, TEXAS, FOR ARCHITECTURAL AND ENGINEERING SERVICES RENDERED UNDER CONTRACT NO. ACHO-167, DATED AUGUST 11, 1955, AS AMENDED. THE CONTRACT WAS ENTERED INTO FOR THE FURNISHING OF THE NECESSARY ARCHITECTURAL AND ENGINEERING SERVICES FOR A PROPOSED REMODELING OF THE SUITES, AND THE MAKING OF CERTAIN STRUCTURAL, MECHANICAL AND OTHER CHANGES IN THE OLD HOUSE OFFICE BUILDING, KNOWN AS THE CANNON HOUSE OFFICE BUILDING. THE PROPOSED REMODELING WORK AND OTHER CHANGES WERE AUTHORIZED BY THE ADDITIONAL HOUSE OFFICE BUILDING ACT OF 1955, 69 STAT. 41.

THE ARCHITECTS WERE REQUIRED TO PREPARE PRELIMINARY PLANS AND ESTIMATES OF COST AND, UPON APPROVAL OF THE PRELIMINARY DRAWINGS, TO PREPARE PROVISIONAL DRAWINGS, FINAL WORKING DRAWINGS AND SPECIFICATIONS FOR THE PROPOSED REMODELING WORK. LARGE-SCALE AND FULL SIZE DETAIL DRAWINGS WERE TO BE FURNISHED AFTER THE LETTING OF A CONTRACT OR CONTRACTS FOR CONSTRUCTION AND THE ARCHITECTS WERE REQUIRED TO FURNISH THE SERVICES OF A RESIDENT REPRESENTATIVE FOR SUPERVISION OF THE CONSTRUCTION WORK, THE CHECKING OF CONTRACTORS' SHOP DRAWINGS AND, WHEN SO REQUESTED, THE VISITING OF FACTORIES, SHOPS AND OTHER PLACES WHERE MATERIAL WAS TO BE FABRICATED OR WORK DONE FOR THE PROJECT. THE ARCHITECTS WERE ALSO REQUIRED TO SERVE AS MEMBERS OF A JOINT ADVISORY BOARD WHICH WAS TO CONSIDER THE VARIOUS PROBLEMS INVOLVED IN THE INTEGRATED PLANNING OF ALL WORK AUTHORIZED BY THE ADDITIONAL HOUSE OFFICE BUILDING ACT OF 1955, BUT IT WAS AGREED THAT THE COMPENSATION TO THE ARCHITECTS SHOULD NOT INCLUDE PAYMENT FOR SERVICES OF SUCH NATURE.

UNDER ARTICLE 2 OF THE CONTRACT, IT WAS AGREED THAT THE ARCHITECTS WOULD BE PAID AS COMPENSATION AN AMOUNT EQUAL TO 8 1/2 PERCENT OF THE TOTAL COST OF THE PROPOSED REMODELING WORK IN THE CANNON HOUSE OFFICE BUILDING. FOR PARTIAL PAYMENT PURPOSES, AND FOR PAYMENT IN THE EVENT OF CONTRACT TERMINATION, IT WAS PROVIDED THAT AN ESTIMATED COST OF $2,000,000 WOULD APPLY UNTIL SUCH TIME AS A REVISED ESTIMATE COULD BE MADE ON THE BASIS OF APPROVED PRELIMINARY PLANS, AND THAT THE REVISED COST ESTIMATE WOULD THEN BE APPLIED UNTIL SUCH TIME AS THE ACTUAL COST COULD BE DETERMINED. ALSO, CERTAIN EVALUATIONS WERE PLACED ON THE PORTIONS OF THE ARCHITECTURAL AND ENGINEERING SERVICES TO BE RENDERED, AMONG WHICH A VALUATION OF 70 PERCENT OF THE TOTAL COMPENSATION WAS PLACED ON ALL SERVICES PERFORMED PRIOR TO THE LETTING OF CONTRACTS BASED ON THE FINAL PLANS AND SPECIFICATIONS.

ARTICLE 3 OF THE CONTRACT PROVIDES, IN PART, THAT 10 PERCENT OF THE AMOUNT DUE FOR SERVICES RENDERED PRIOR TO THE LETTING OF THE PRINCIPAL CONTRACT OR CONTRACTS FOR THE PERFORMANCE OF THE REMODELING WORK WOULD WOULD BE RETAINED FROM EACH PARTIAL PAYMENT. ARTICLE 4 HAS REFERENCE TO THE POSSIBILITY THAT CHANGES MIGHT BE MADE IN CONTRACT REQUIREMENTS WHICH WOULD CAUSE SUBSTANTIAL INCREASES IN EXPENSE TO THE ARCHITECTS; AND IT WAS AGREED THAT THE GOVERNMENT WOULD PAY "AN EQUITABLE AMOUNT FOR THE EXTRA SERVICE PERFORMED AND THE EXTRA EXPENSE INCURRED.' ARTICLE 5 PROVIDES THAT THE GOVERNMENT SHALL HAVE THE RIGHT TO TERMINATE THE CONTRACT, IN WHICH CASE THE DRAWINGS, SPECIFICATIONS, AND ALL OTHER DATA AND INFORMATION PREPARED AND COMPILED BY THE ARCHITECTS WERE TO BECOME THE PROPERTY OF THE UNITED STATES, AND THE ARCHITECTS WERE TO BE PAID ,AN EQUITABLE AMOUNT FOR ALL SERVICES SATISFACTORILY PERFORMED UP TO THE DATE OF TERMINATION, BASED ON THE FIGURES AND PERCENTAGES SET FORTH IN ARTICLE 2 HEREOF.'

IT IS REPORTED THAT THE PRELIMINARY PLANS AND ESTIMATES OF COST WERE COMPLETED BY THE ARCHITECTS AND SUBMITTED TO THE ARCHITECT OF THE CAPITOL ON APRIL 10, 1956. THE PRELIMINARY PLANS AND ESTIMATES OF COST IN THE TOTAL AMOUNT OF $9,000,000 WERE APPROVED BY THE HOUSE OFFICE BUILDING COMMISSION ON MAY 17, 1956, AND THE ARCHITECTS WERE ADVISED BY LETTER DATED JUNE 5, 1956, THAT THE $2,000,000 ESTIMATE IN ARTICLE 2 OF THE CONTRACT WAS REVISED TO $9,000,000.

THE HOUSE OFFICE BUILDING COMMISSION CONSIDERED THE ADVISABILITY OF COMPLETING ALL OF THE PROPOSED WORK SEVERAL TIMES DURING THE YEARS 1956 TO 1960 BUT THE COMMISSION FINALLY DECIDED TO DEFER THE COMMENCEMENT OF THE MAJOR PORTION OF THE WORK UNTIL AFTER THE OCCUPANCY OF THE NEW HOUSE OFFICE BUILDING NOW KNOWN AS THE RAYBURN HOUSE OFFICE BUILDING.

CERTAIN WORK WAS UNDERTAKEN AND THE ARCHITECTS PERFORMED THE SERVICES FOR THE DESIGN AND SUPERINTENDENCE OF THE CONSTRUCTION OF A THREE-LEVEL GARAGE, THE INSTALLATION OF EMPTY TELEPHONE CONDUITS FOR TELEPHONE CABLE TO BE INSTALLED BY THE TELEPHONE COMPANY TO MEET THE NEEDS OF RAYBURN BUILDING, AND THE REMODELING OF SPACE FORMERLY OCCUPIED BY THE HOUSE POST OFFICE IN THE CANNON BUILDING. THE TOTAL COST OF THE THREE PROJECTS AMOUNTED TO THE SUM OF $1,566,688.72, WHICH INCLUDED AN ALLOWANCE OF $8,406 TO ONE OF THE CONTRACTORS FOR EXTRA COSTS INVOLVED IN APPROVED OVERTIME WORK. ADMITTEDLY SOME OF THE WORK ON THE THREE PROJECTS WAS NOT INCLUDED IN THE PRELIMINARY PLANS SUBMITTED BY THE ARCHITECTS IN APRIL 1956, BUT THE GROSS AMOUNT OF $1,566,688.72 WAS DEDUCTED IN ARRIVING AT THE AMOUNT OF $7,433,311.28 AS THE ESTIMATED COST OF CONSTRUCTION CONTRACTS "NOT YET LET" ON THE BASIS OF THE PLANS AND SPECIFICATIONS WHICH WERE DEVELOPED BY THE ARCHITECTS AFTER APPROVAL OF THE PRELIMINARY PLANS AND ESTABLISHMENT OF THE $9,000,000 COST ESTIMATE.

THE ARCHITECTS WERE REQUIRED TO PERFORM OTHER SERVICES UNDER A SUPPLEMENTAL AGREEMENT OF MAY 28, 1958. A CHANGE ORDER WAS ISSUED ON SEPTEMBER 26, 1962, DELETING ONE ITEM OF WORK WHICH HAD BEEN ORDERED BY THE HOUSE OFFICE BUILDING COMMISSION TO BE ABANDONED. THE PROJECT COVERED BY THE SUPPLEMENTAL AGREEMENT OF MAY 28, 1958, WAS ALSO ABANDONED AND IT WAS DETERMINED THAT THE ARCHITECTS WERE IN THESE TWO CASES ENTITLED TO FEES TOTALING THE SUM OF $22,355.22. THE ARCHITECTS HAVE BEEN PAID THE TOTAL SUM OF $552,843.06, WHICH INCLUDES THE AMOUNT OF $22,335.22 COVERING ABANDONED WORK, THE SUM OF $132,454.02 AS FULL PAYMENT FOR SERVICES RENDERED ON THE COMPLETED CONTRACTS, AND THE SUM OF $398,053.82 AS PARTIAL PAYMENTS FOR SERVICES RENDERED TO THE POINT OF PREPARING THE FINAL PLANS AND SPECIFICATIONS FOR CONSTRUCTION CONTRACTS "NOT YET LET.' THE AMOUNT OF $398,053.82 WAS COMPUTED AS FOLLOWS:

TABLE

70 PERCENT OF 8 1/2 PERCENT OF $7,433,311.28 $442,282.02

LESS: 10 PERCENT RETAINED 44,228.20

NET AMOUNT DUE ARCHITECTS$398,053.82

WHEN THE FINAL PLANS AND SPECIFICATIONS FOR THE REMAINING REMODELING WORK WERE PREPARED AND READY FOR COMPETITIVE BIDDING, THE ARCHITECTS SUBMITTED AN ESTIMATE OF COST IN THE AMOUNT OF $10,710,286 IN LIEU OF THE BALANCE OF $7,433,311.28 UNDER THE 1956 ESTIMATE ($9,000,000) AS DETERMINED BY THE ARCHITECT OF THE CAPITOL. HOWEVER, THE HOUSE OFFICE BUILDING COMMISSION DIRECTED THE SUBMISSION OF A NEW ESTIMATE OF COST TO CARRY OUT A MORE SIMPLIFIED REMODELING SCHEME, AND THIS DIRECTIVE RESULTED IN THE APPROVAL OF A MORE SIMPLIFIED PLAN FOR WHICH THE COST ESTIMATE WAS $5,200,000. THE COMMISSION AUTHORIZED THE PREPARATION OF A NEW SET OF PLANS AND AGREED THAT THE CONTRACT SHOULD BE MODIFIED TO PROVIDE FOR PAYMENT OF "A FEE OF 7 PERCENT OF THE COST OF THE CONSTRUCTION WORK UNDER THIS SCHEME.'

THE HOUSE OFFICE BUILDING COMMISSION REQUESTED THAT YOU OBTAIN THE OPINION OF OUR OFFICE CONCERNING THE QUESTION AS TO WHAT AMOUNT MESSRS. DEWITT AND HARDISON ARE ENTITLED TO BE PAID FOR THE REMAINING PLANS AND SPECIFICATIONS PREPARED BY THEM ON THE BASIS OF THE APPROVED PRELIMINARY PLANS WHICH WERE ORDERED BY THE COMMISSION TO BE ABANDONED.

SINCE THE ORIGINAL PLANS FOR MOST OF THE REMODELING WORK HAVE BEEN ABANDONED, THERE IS NO DISPUTE CONCERNING THE ARCHITECTS' ENTITLEMENT TO THE AMOUNT OF $44,228.20, REPRESENTING THE 10 PERCENT RETAINED ON THE AMOUNT EARNED BY THE ARCHITECTS ON THE ITEMS OF WORK "NOT YET UNDER CONTRACT.' HOWEVER, THE ARCHITECTS HAVE CLAIMED THE ADDITIONAL AMOUNTS OF $25,287 AND $22,114. THE CLAIM FOR $25,287 IS BASED ON THE CONTENTION THAT ABOUT $425,000 WORTH OF THE COMPLETED WORK WAS IN ADDITION TO THAT CONTEMPLATED AT THE TIME OF THE PREPARATION OF THE PRELIMINARY PLANS AND COST ESTIMATES FOR THE ENTIRE PROJECT. THE CLAIM FOR $22,114 IS BASED UPON A BELIEF THAT AN EQUITABLE ADJUSTMENT SHOULD BE MADE DUE TO AN ESCALATION IN THE COST OF PERFORMING ARCHITECTURAL AND ENGINEERING SERVICES SINCE THE YEAR 1956.

IT APPEARS TO BE YOUR CONCLUSION THAT THE ARCHITECTS ARE CORRECT IN CONTENDING THAT THE SUM OF $425,000 SHOULD NOT HAVE BEEN DEDUCTED FROM THE $9,000,000 COST ESTIMATE IN ARRIVING AT THE SUM DUE THE ARCHITECTS FOR SERVICES RENDERED ON THE PROPOSED REMODELING WORK WHICH WAS NOT MADE THE SUBJECT OF CONTRACT AWARDS. SOME OF THE COMPLETED WORK WAS NOT PROVIDED FOR IN THE PRELIMINARY PLANS AND THE ARCHITECTS WERE REQUIRED TO DESIGN AND SUPERINTEND THE CONSTRUCTION OF A THREE-LEVEL GARAGE IN LIEU OF THE ORIGINALLY PLANNED TWO-LEVEL GARAGE. IN OUR OPINION, THE ARCHITECTS ARE CLEARLY ENTITLED TO AN ADDITIONAL FEE OF $25,287, REPRESENTING 70 PERCENT OF 8 1/2 PERCENT OF $425,000, ON THE BASIS OF ADJUSTING THE $9,000,000 COST ESTIMATE TO CONFORM WITH THE ACTUAL DIFFERENCE BETWEEN THAT ESTIMATE AND THE COST OF COMPLETED WORK WHICH WAS ACTUALLY CONTEMPLATED FOR PERFORMANCE AT THE TIME THE ESTIMATE OF $9,000,000 WAS ESTABLISHED FOR PARTIAL PAYMENT AND OTHER PURPOSES.

THE ARCHITECTS BELIEVE THAT, IN VIEW OF THE EXTENDED PERIOD OF DELAY ON THE PROJECT, THEY SHOULD BE REIMBURSED FOR INCREASED COSTS OF PERFORMANCE OF THEIR CONTRACT. THE ADJUSTMENT REQUESTED IS FOR APPROXIMATELY 5 PERCENT OF THE PLAN FEE OF $442,282.02, AS PREVIOUSLY DETERMINED BY YOUR OFFICE TO BE APPLICABLE TO THE ARCHITECTURAL AND ENGINEERING SERVICES RENDERED ON THE PROPOSED REMODELING WORK WHICH WAS NOT COVERED BY CONSTRUCTION CONTRACTS. YOU STATE THAT THE COSTS TO ARCHITECTS ACTUALLY INCREASED BY ABOUT 5 PERCENT FROM 1960 WHEN APPROXIMATELY 80 PERCENT OF THE WORK OF PREPARING CONTRACT PLANS AND SPECIFICATIONS WAS COMPLETED. YOU ALSO EMPHASIZE THE FACT THAT THE COST ESTIMATE OF $10,710,286 FOR COMPLETION OF THE BALANCE OF THE ORIGINALLY PLANNED REMODELING WORK IS CONSIDERED BY YOUR OFFICE TO BE FAIR AND REASONABLE ON THE BASIS OF CURRENT CONSTRUCTIONS COSTS.

THE ARCHITECTS STATE THAT, DURING THE YEARS FOLLOWING THE PREPARATION OF THE PRELIMINARY PLANS AND THE SUBMISSION OF THE $9,000,000 COST ESTIMATE, IT WAS FELT BY ALL PARTIES CONCERNED THAT THE ESTIMATE WOULD BE REVISED WHEN BIDS WERE RECEIVED. THEY REFER TO THE DIFFERENCE OF APPROXIMATELY $3,276,975 BETWEEN THE NEW ESTIMATE OF $10,710,286 AND THE ESTIMATE OF $7,433,311.20 FOR THE REMAINING WORK WHICH WAS APPLIED BY YOUR OFFICE IN THE MAKING OF THE PARTIAL PAYMENT OF $398,053.82; AND SUGGEST THAT IT WOULD HAVE BEEN POSSIBLE FOR THEM TO MAINTAIN THAT THEY ARE ENTITLED TO 70 PERCENT OF 8 1/2 PERCENT OF THE $3,276,975, OR $194,980, IN ADDITION TO THE ASSUMED EARNINGS OF $442,282.02. HOWEVER, THE ARCHITECTS RECOGNIZED THAT THEY HAD MADE CONSIDERABLE PROGRESS ON THE DRAWINGS BEFORE THE DECISION WAS REACHED TO DEFER ACTION ON THE REMODELING FOR SEVERAL YEARS, AND STATED THAT TO BE PAID THE FULL TO US TO WITHHOLD REASONABLE PAYMENT FOR THE ESCALATED COST OF PLAN PREPARATION.'

THE CONTRACT CONTAINS NO PROVISION FOR PAYMENT TO THE ARCHITECTS OF AMOUNTS BASED UPON AN ESCALATION OF THE COSTS OF THE SERVICES WHICH THEY AGREED TO PERFORM. HOWEVER, IT APPEARS THAT IT WOULD BE UNREASONABLE TO CONSTRUE THE PROVISIONS OF ARTICLE 2 OF THE CONTRACT AS MEANING THAT, FOR PARTIAL PAYMENT PURPOSES OR PAYMENT IN THE EVENT OF CONTRACT TERMINATION, THERE COULD BE NO ADJUSTMENT IN THE ESTIMATE OF THE TOTAL COST OF THE PROJECT AFTER THE PRELIMINARY PLANS AND COST ESTIMATES WERE SUBMITTED AND APPROVED. IF ARTICLE 2 SHOULD BE CONSTRUED IN THAT MANNER, THE BEST AVAILABLE ESTIMATE OR ESTIMATES OF COST COULD NOT BE USED IN THE COMPUTATION OF AMOUNTS CURRENTLY DUE THE ARCHITECTS AND IT IS APPARENT THAT THE PARTIES TO THE CONTRACT DID NOT INTEND ANY SUCH IMPROBABLE RESULT.

WE DO NOT NECESSARILY CONCLUDE THAT THE ARCHITECTS WOULD BE ENTITLED IN THE PARTICULAR CIRCUMSTANCES TO FULL PAYMENT OF THE ABOVE-REFERRED TO AMOUNT OF $194,980, COMPUTED ON THE BASIS OF THE $10,710,286 ESTIMATE OF THE CURRENT COST OF THE REMODELING WORK NOT PERFORMED. IT IS NEVERTHELESS REASONABLE TO ASSUME THAT THE GOVERNMENT'S LIABILITY IN THE MATTER WOULD AT LEAST EQUAL, IF NOT EXCEED, THE AMOUNT OF $22,114 REQUESTED BY THE ARCHITECTS AS AN EQUITABLE ADJUSTMENT FOR THE ADDITIONAL COST OF FURNISHING ARCHITECTURAL AND ENGINEERING SERVICES, WITH THE UNDERSTANDING THAT THEIR CLAIM FOR ANY AMOUNT AS A FEE ADJUSTMENT BASED ON THE CURRENT ESTIMATE OF CONSTRUCTION COSTS WOULD BE RELINQUISHED. ACCORDINGLY, YOU ARE ADVISED THAT IT IS OUR OPINION THAT YOUR OFFICE WOULD BE WARRANTED IN MAKING PAYMENT TO THE ARCHITECTS OF THE AMOUNT OF $91,629.20, REPRESENTING THE TOTAL OF THE ABOVE CLAIMS FOR $44,228.20, $25,287 AND $22,114, AS A FINAL SETTLEMENT FOR ALL WORK PERFORMED UNDER CONTRACT NO. ACHO-167 BEFORE THE PLANS AND SPECIFICATIONS FOR THE REMAINDER OF THE ORIGINALLY PROPOSED REMODELING WORK WERE ORDERED BY THE HOUSE OFFICE BUILDING COMMISSION TO BE ABANDONED.